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Cy pres is a legal doctrine from courts of equity that allows the court to change the terms of a charitable trust when the testator’s underlying charitable intent cannot be completed as directed. Rather than allow the charitable gift to fail, the written instrument can be changed so that the funds are used in a similar and executable way. The French term literally means “as near as," and its application has been expanded in the United States to include the redistribution of settlements in class action lawsuits as well as charitable trusts. Some jurisdictions in England, Wales, and Scotland have also retained the doctrine.
When applying the doctrine of cy pres, the court will substitute a similar charitable object for the original one that is no longer possible to fulfill. The new charitable object should represent the gift’s original charitable purpose. The doctrine may also be applied when the testator bequests funds for charitable purposes generally without specifying a beneficiary, forcing the court to select one. The underlying legal theory is that a court has the power to change a charitable trust in order to prevent it from failing altogether.
A famous American cy pres case is Jackson v. Phillips, decided by the Massachusetts Supreme Court in 1867. The Bostonian testator died in 1861 and created a monetary gift to be used to help change public opinion of slavery. This purpose became impossible to execute once slavery was abolished in 1865. The court modified the trust so that the remaining money could be given to former slaves in need living in the vicinity of Boston.
Courts do not automatically apply the doctrine every time a charitable trust is at risk of failing. The trust will be allowed to fail if the testator desired a very specific purpose that cannot be substituted by another without straying too far from the original intent. There is also no general bequest for charity in such cases. The presumption is that the testator would rather have the trust fail than divert the funding elsewhere.
Controversially, the doctrine has been applied by courts in the United States to facilitate the redistribution of unclaimed money from class action lawsuit settlements. By the time a settlement is reached, many class members may no longer be locatable or have passed away. As a result, a large amount of settlement money meant to benefit the class goes unclaimed.
Rather than return the money to the wrongdoing defendant, the court can apply cy pres and distribute the funds to a charity likely to assist class members. In Masters v. Wilhelmina Model Agency, a judge presiding over a 2007 class action lawsuit involving fashion models in New York redistributed unclaimed funds to programs he felt would benefit the class members. After two days of interviewing potential beneficiary organizations, the judge chose programs that fought eating disorders and drug abuse.
Such use of cy pres is the subject of much debate in the American legal field. While some applaud using unclaimed funds to help charities and local communities, others see a danger in allowing judges to spend other people’s money without restriction. Rather than distribute the unclaimed funds to charity, some critics suggest simply awarding a larger share to locatable plaintiffs.
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